HuHot Mongolian Grill sold to parent company in Montana

Jan. 11, 2013

HuHot Mongolian Grill has branches in Grand Chute and Green Bay. The local branches were sold to the parent company in December. / Gannett Wisconsin Media

What’s The Buzz?

Business reporter MaureenWallenfang keeps Post-Crescent readers up to the minute on comings and goings in the Fox Valley retail andrestaurant scenes.» Follow her at postcrescent.com/TheBuzz. Maureen’s Twitterhandle is @Wallenfang. » In print, Wallenfang’s columns appear every Sunday, Wednesdayand Friday. » Reach Maureen by phone at 920-993-1000,ext. 287, and by email at thebuzz@postcrescent.com.

More

ADVERTISEMENT

Though it might not look like anything has changed to the naked eye, a major shift has taken place at the HuHot Mongolian Grill.

The Missoula, Mont.-based HuHot Mongolian Grill parent company purchased the restaurant from Appetize, the Appleton-based franchisee, along with six more franchised HuHots that Appetize owned in Wisconsin and Indiana.

David Lindenstruth and his family — brother Fred, sister Heidi Carlson, and then-wife Tracy — opened the franchised HuHot restaurant at 3456 W. College Ave. in 2006. Lindenstruth convinced his family the concept would do well, and they invested $800,000.

It did do well, and generated $1.5 million in its first partial year, allowing him to quit his day job as a Plexus engineer.

By 2010, it was paying back the initial investment several times over every year, growing to a four-restaurant franchise company doing an annual volume of $8 million. The company was winning awards in the community, and within the HuHot company, that recognized its growth, entrepreneurship and charitable giving.

By 2012, Appetize had seven restaurants, but Lindenstruth said they’d gotten to the point where profits were getting squeezed from both ends. Commodity costs and tax rates were rising on one end and he was reluctant to raise prices on diners on the other.

He decided it was time to sell.

“It’s difficult to drive new business and increase sales in this economy,” he said. “It seemed like a good opportunity to sell while we were on the top.”

Dan, Linda and Andy Vap, owners of HuHot, had first right of refusal on the franchises and they exercised that option. They purchased the seven restaurants for an undisclosed amount in a deal closed in December. Lindenstruth simply said the offer was in the range of what he was looking to get.

Andy Vap, the son of Dan and Linda, is HuHot’s chief executive officer based in Milwaukee. He said he’s well positioned to watch over the newly purchased restaurants.

“The company had a vested interest in those locations. They’re good stores, though they vary and some do better than others. They’re profitable,” he said.

(Page 2 of 2)

“I have the exact same concerns about rising utility and commodity costs and the fact that everything is going up in price. Customers don’t want to spend more money.”

Vap said there are no changes planned for the Grand Chute restaurant and no immediate changes in pricing. He said they were keeping all of the employees.

“We truly believe in our concept. I have faith in our ability to compete with other restaurants. We stack up very well,” he said. “The restaurant market isn’t growing, but we’re positioned well to compete within it.”

The Grand Chute branch has a good acceptance level in the community and is one of the company’s top five income producers, he said.

HuHot has nearly 50 restaurants in 17 states.

The purchase of the seven restaurants brought the company-owned portfolio to 15. Vap said purchasing them protected the franchise and flow of royalties.

After they’ve settled into running the Wisconsin branches smoothly, he said they’ll look for more locations, likely in Oshkosh, Wausau or on Madison’s east side.

For Lindenstruth, meanwhile, the future is undetermined.

“There will be some level of soul searching,” he said. “I’m leaving the doors open for anything at this point. I’ll look at other entrepreneurial opportunities, probably outside of the restaurant industry. But I wouldn’t exclude the restaurant industry if there was a good opportunity.”